"Solid results in agribusiness and food & ingredients were offset somewhat by difficulties in sugar & bioenergy. Lower milling volumes from reduced sugarcane yields due to dry weather in Brazil, as well as challenges related to the start-up of some mills, contributed to significantly lower than expected results in this segment during the period.
"We enter 2011 with good momentum. During the year we will strengthen our core business by inaugurating new soy processing facilities in Vietnam and China, and our export grain terminal in the Pacific Northwest will come on line in time for the U.S. harvest. We are also expanding our grain elevator network in the U.S. to better serve domestic and international trade flows. During this past year we've made great progress in building a solid foundation for our global sugar platform, a growth business in which we have excellent assets and strong expansion capability.
"As we look ahead, high prices are giving farmers clear incentive to produce larger crops, which are needed to help build global stocks. In the interim, market volatility and concern over high food prices will likely persist. At these times, the services that Bunge provides, which facilitate global trade and improve the efficiency of the food production chain, are more valuable than ever."
Bunge said higher results in the fourth quarter for the agribusiness sector were primarily due to a strong performance in our grain merchandising business, where we effectively managed risk in a volatile environment while meeting the product needs of our customers. Oilseed processing was slightly below last year. Volumes in the quarter were higher primarily due to improved crop supplies in South America, which experienced weather-related shortages the previous year. Fourth-quarter 2009 EBIT included charges of $26 million related to impairments of long-term assets.
Results in Bunge’s sugar and bioenergy sector for the quarter were negatively impacted by lower sugarcane yields from dry weather in Brazil, which significantly reduced the production of sugar and ethanol. Results were also impacted by challenges related to the start-up of our Pedro Afonso mill and the expansion of crushing capacity at our Santa Juliana mill, both of which came on line during the quarter. Results in its sugar merchandising business exceeded last year due to higher margins.
Bunge noted that its milling sector’s results in the quarter were adversely impacted by a $9 million impairment charge related to a long-term supply contract that accompanied an acquisition of a wheat mill. Excluding this charge, performance this quarter improved primarily due to higher margins in wheat milling.
The edible oils sector’s results in the fourth quarter of 2009 included a gain of $66 million on the sale of Bunge’s joint venture interest in Saipol and approximately $6 million of Saipol operating results. Excluding these Saipol-related amounts, results in the quarter were higher than last year, primarily due to improved performance in its European business, which benefited from higher margins and volumes.
"Looking to 2011, the favorable environment in agribusiness should continue. Demand for our products is growing, and the world needs big harvests to meet this rise in consumption,” said Drew Burke, chief financial officer. “Global trade should remain strong, which should benefit our grain merchandising operations. While there is still excess capacity in certain regions, oilseed processing should see improved product demand. And as mentioned earlier, we should benefit from our new grain and oilseed investments coming on line during the year.
"In sugar & bioenergy, the drought this past year in Brazil reduced the amount of sugarcane we will have available for milling in 2011. We expect milling volumes of approximately 17 million metric tons of cane, which is less than our 21 million metric tons of industrial capacity, but represents a significant increase over 2010 levels of approximately 13.5 million metric tons. We expect all of our eight mills to be operating. Global demand for sugar is growing, and we expect a positive environment for our merchandising business. The Brazilian ethanol market remains strong. Our results in this segment will be significantly weighted toward the second half of the year, due to the seasonality of the Brazilian sugarcane harvest. The positive trend we have seen in food & ingredients over the past two years should continue.
"In fertilizer, farm economics are good, which should result in increased plantings and demand for fertilizer. We expect our volumes to improve as the adjustments we are making to our Brazilian business are completed. Additionally, we expect the following for 2011: depreciation, depletion and amortization of approximately $500 million; capital expenditures of about $1 billion, approximately 30% of which will be invested in maintenance, safety and environmental projects; and a full year tax rate of approximately 15%."
